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After some more digging, in 2016 Rapha only made a profit of £1.1 million ($1.4 million) on £48.8 million ($62.1 million) revenues in 2016. They were just acquired for $260 million on just $1.4 million in profit. Talk about a bubble and more money than sense.

Yes, of course... but the headline just wouldn't have the same appeal if it read "RZC Investments buys Rapha". And the $260M is really just for likely a little over half of it. Enough to give them a majority stake, which technically doesn't even have to be half depending on the share distribution. But that's all boring stuff. Just follow the flashing light to Aisle 9!! Gotta hand it those Rapha boys. Great success story in a very short time. Marketing done right.

That's a sh*tload of money for Rapha. They're a good marketing company, but do they have any IP? (I'm a fan and like the Proteam line, and as a marketer appreciate the solid brand building they've done. They are a marketing company, after all. Assos is a product company. Castelli is both.)

Assuming they had an EBITDA of $2.5M (pounds to dollars), at a purchase price multiple of 5x, the company should have sold for $12-13M.

The buyers are by all accounts good dudes. They also clearly know a lot more about M&A than I do. Or they're crazy.

Yes, of course... but the headline just wouldn't have the same appeal if it read "RZC Investments buys Rapha". And the $260M is really just for likely a little over half of it. Enough to give them a majority stake, which technically doesn't even have to be half depending on the share distribution. But that's all boring stuff. Just follow the flashing light to Aisle 9!! Gotta hand it those Rapha boys. Great success story in a very short time. Marketing done right.

$260 million is likely half? Who in their right mind would value Rapha at 1/2 billion? Not only is cycling a very small segment of the sporting world, but the segment that Rapha caters to is an even smaller segment. Someone would need to be drunk to give Rapha that valuation.

GonaSovereign wrote:That's a sh*tload of money for Rapha. They're a good marketing company, but do they have any IP? (I'm a fan and like the Proteam line, and as a marketer appreciate the solid brand building they've done. They are a marketing company, after all. Assos is a product company. Castelli is both.)

Assuming they had an EBITDA of $2.5M (pounds to dollars), at a purchase price multiple of 5x, the company should have sold for $12-13M.

The buyers are by all accounts good dudes. They also clearly know a lot more about M&A than I do. Or they're crazy.

Spot on regarding Rapha being a great marketing company. Their success lies in telling a story, a lifestyle and portraying that through their product line and photoshoots. They have done bang-up job with that.

I'd agree with your rouge estimate for what Rapha should have sold for. Maybe slightly higher if the acquiring firm believes there is room for growth. I'm still speechless for what RZC Investments decided to pay.

"Marginal gains are the only gains when all that's left to gain is in the margins."